FICO and the Credit Bureau Cartel

Open-source and alternative credit models

• Several suggest an open-source scoring algorithm with private firms only storing data, to increase transparency and allow people to see exactly why their score is low.
• Others note FICO already discloses high-level factors but not the exact formula, which some see as opaque.
• Open Banking / consumer-data-sharing laws in other countries are cited as a possible foundation for more open models.

How credit scores behave in practice

• Common recipe repeated: pay on time, keep utilization low, avoid excessive inquiries, maintain long-lived accounts, have some mix of credit types.
• Multiple people report monthly swings based on current card balances, even when they pay in full, especially after large one-off charges.
• Some describe paradoxical drops after paying off debt early or closing unused cards.

Critiques of FICO’s logic and incentives

• Disagreement over whether behaviors like inquiries or maxed cards truly signal “lack of money” vs. other factors (rate shopping, misunderstanding scoring rules).
• Many argue the model captures “propensity to pay” and commercial value, not just default risk; some call it a “profitability score.”
• Complaints that scores penalize frugality: paying cash, minimizing products, or closing accounts can hurt, even with perfect payment history.

Regulation, monopoly, and competition

• Strong focus on regulatory capture: government mortgage programs (Fannie/Freddie, FHFA) effectively mandate FICO, entrenching its power.
• Attempts to introduce competition (e.g., VantageScore) are described as hamstrung by rules requiring use of both scores rather than letting lenders choose.
• Some see the problem as overregulation; others as cartel behavior exploiting regulation. Many call for structural breakup rather than more fine-grained rules.
• Startups are viewed as blocked by contracts, legal restrictions, and government requirements, not by lack of technical capability.

Mortgage fees and housing ecosystem

• Debate over the importance of a “400%” increase in mortgage credit-check fees: some see it as minor vs. closing costs; others note it’s paid repeatedly by unsuccessful applicants and baked into everyone’s costs.
• Title insurance is heavily debated: some see it as a bigger “scam” cost; others cite real cases where it saved buyers or owners from fraud and liens.
• Several argue better, unified government property and lien registries (e.g., Torrens systems) could drastically reduce need and cost of title insurance, though someone must still bear residual risk.

Non-US and alternative credit approaches

• Examples cited: Finland largely uses default registries (and now a positive credit register) instead of scores; Kazakhstan’s system with a government-run bureau plus private bureaus is described as cheaper, more flexible, and more competitive.
• Government-operated credit infrastructure is argued to set a price ceiling while allowing private innovation, though some worry state-backed services can crowd out private markets.

Credit unions and non-FICO lending

• Anecdotes show some credit unions will underwrite loans without FICO, using direct assessment of assets, income, and relationship with the member.
• However, most large-scale mortgage lending that is securitized is said to still require a FICO pull.

Broader governance analogies

• Several comments generalize the issue to U.S. regulatory capture and institutional “tech debt,” contrasting with more modern systems abroad.
• There is meta-debate about whether the root cause is “capitalists” exploiting systems or regulators entrenching monopolies, with many concluding it’s both.